The Successful HOA

What are some of the differences between a successfully operated HOA and those that are flirting with disaster? The following three sections address some of the major considerations that may make or break a particular community.
The HOA Documents

The Bylaws - this document defines the powers that are legally given to the HOA. Is the HOA given sufficient power to effectively manage or too much power? What are the checks and balances to HOA powers?

The CC&Rs - this document sets out the rules by which the whole community agrees to adhere to. Once set, they are difficult to change. They outline the parameters from which the HOA board can establish other necessary rules. Do these covenants, conditions, and restrictions allow for too wide a variety of interpretations or are they so narrowly defined that they don’t allow for any changes in circumstances?

The Rules - depending on the powers and regulations stipulated in the first two documents, the HOA board may create, and continually revise, one other important document. This one specifies another whole set of rules and regulations for residents. This may be very basic or very long and detailed. What this may include depends not only on the powers granted under the Bylaws and regulated by the CC&Rs, but also on the ‘temperament’ and expertise of the board members.

The Board Members

Their Temperament - truth be told, some people love to wield power. They are natural ‘control freaks’. If your HOA board is predominantly operated by this type of individual then they will most likely create many vexing and meticulous ‘rules and regulations’. Other boards are made up of a majority of folks who have a more or less laissez faire approach to management and life in general. Either of these polar opposites of board ‘temperament’ may eventually destroy a community.

Their Expertise - many times the majority of folks willing to volunteer to serve on an HOA board are those without the necessary competencies for the responsibilities that they will have to deal with. The larger the community, the more complex the issues. Inexperience among HOA board members may lead to disastrous results for all residents. It is rather easy to get a community embroiled in financial/legal difficulties through bad decisions made with good intentions. Common sense is not enough. Board members need to understand current laws pertaining to governing an Association.

The Property Management Company

The Necessity - unless the HOA operated community is quite small, a property management company is usually hired to serve the needs of that community. Choosing the right property management company is essential to the successful operation of that community. An incompetent and/or unethical PM company will wreak havoc on a community for years to come.

Rule Enforcement - an effective property management company will not only work within the budget to reasonably maintain the property, but will serve as the enforcing agency for the various ‘rules and regulations’ of that community. Board members have a vested interest in the property and may appear to favor some folks more than others. An effective PM company will objectively enforce the rules consistently across the board to eliminate most accusations of favoritism.

Communication - disaster strikes every community when communication breaks down between the property management company and the HOA board members and the residents. The HOA board needs to know that the property management company will reliably work within the rules set by the board and it’s Bylaws and CC&Rs. It needs to know that the PM company will be in constant consultation with them about any issues within the community that need to be addressed as either infractions of the rules or requiring additional expenditures of funds. Moreover, the PM company will work with the board to make sure that every resident - whether owner or tenant - has an up-to-date, easily understood copy of the ‘rules and regulations’.

Style - as with the board members, different PM companies deal with issues with a different tone. Some communicate with residents with a judgmental and belittling attitude while others are firm, yet unendingly respectful and polite to all without prejudice. If residents discover that even their most legitimate concerns are always met with an accusatory and condescending attitude, they will find other, often less desirable ways to communicate their anger.

Expertise - a good PM company understands that many HOA boards are made up of folks faced with a steep learning curve. They will patiently attempt to educate the board members in areas with there is a lack of essential knowledge. They will coach the board to make sure that their ‘rules and regulations’ are both clearly defined and enforceable. They will also provide the best qualified vendors for services needed.

Begging the Question: What if your community is already in a mess? What if your HOA board has been run by a clique of obsessive compulsives for years and their ever increasing number of ‘picky’ rules are driving you and your community crazy? What if the board would like to make changes in the Bylaws and CC&Rs so that they can more effectively operate but can’t get a quorum of residents together to make the necessary changes? These are common questions without any easy answers. These are the types of questions that require the expertise of a qualified, an unfortunately expensive, attorney.

There are, of course, many other issues that may come into play. What we’ve listed above covers some of the larger considerations. Send us your feedback. What else would you have included in this article? What would you have defined differently?